V.1.1 - A Decentralized and Cooperative Protocol for Next Generation Logistics
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v.1.1
A Decentralized and Cooperative Protocol
for Next Generation LogisticsContents
1. Executive summary 11. Legal Disclaimer
2. Introduction
3. dKargo Platform
3.1 dKargo : A Decentralized and Cooperative Protocol
for Next GenerationLogistics
3.2 dKargo’s Solution
3.3 dKargo’s Value Proposition
4. dKargo Business Flow
4.1 Provide Optimal Route
4.2 Payment
4.3 Settlement
4.4 Recording Data
4.5 Logistics Data Transaction Market
4.6 Transaction Fee
4.7 Guarantee and Insurance
4.8 Mediation of Disputes
4.9 Value-added Service Provider
5. dKargo’s Economic Model
5.1 DKA Token
5.2 DKA Token Incentive Pool
5.3 DKA Token Incentives Distribution
6. dKargo Technology Description
– Key elements
6.1 dKargo Platform Structure
7. Business Partner
7.1 Flagship Partner
7.2 Attract Additional Partners
8. Roadmap
9. Timeline
10. Team & Advisors
10.1 Team
10.2 Advisor
dKargo | Decentralized and Cooperative Protocol for Next Generation Logistics1. Executive summary
The logistics industry serves as the veins of the economy. The industry is poised to grow enormously
to reach USD 15.5 trillion by 2024. At the same time, the industry is facing transformational
change; the rapid growth of the e-commerce market, the transition from business-to-business
(B2B) to business-to-consumer (B2C) and consumer-to-consumer (C2C), and the expansion of
cross-border trade. With such changes in the market, customers now have a higher expectation
for more cost-effective, flexible and faster logistics services. Moreover, existing services focused
on storage and delivery transportation must go beyond to meet the growing demand for a wider
variety of services. Nevertheless, incumbents are stuck in the old ways, competing against each
other and are failing to improve services to meet their customer demands.
The logistics industry is facing a structural problem – due to different interests of participants
in the logistics network, no credible protocol exists that enables transparent sharing of data.
This makes collaboration inefficient or nearly impossible. The participants are fiercely competing
against each other to achieve economies of scale by investing heavily in all ranges of service
from first-mile to last-mile delivery. However, this has led to double-investment and crippled the
industry with inefficiency. Even in international logistics where collaboration should be relatively
easy to achieve, complicated procedures are hindering collaboration because of inefficient
data sharing. This inefficient structure for collaboration has left no choice for logistics service
providers but to concentrate their services in freight transportation and storage. Henceforth, the
possibility of creating greater added-value is decreasing and the cost is rising, and yet the quality
of logistics service is falling.
As a blockchain-based logistics protocol, dKargo aims to address challenges that hinder
collaboration in the logistics industry and build a new type of an efficient logistics network.
dKargo will enable participants to use credible and generally standardized data on a blockchain-
based public ledger. dKargo’s plans for the development of the logistics industry are as follows:
1 Maximizing Efficiency of the Logistics Industry : A.I. Route Optimization
Suggest optimal logistics route in which various participants can collaborate and thereby
maximize the overall efficiency of the logistics network
2 Evolution of Logistics Ecosystem : Whole-mile Logistics
Build whole-mile logistics and a network that can utilize different modes of transportation other
than the conventional freight transport modes and ultimately create an entirely new logistics
ecosystem
3 Boundary-Crossing Innovation in Logistics : Interconnected Logistics
Provide a wider range of logistics services to deliver new value by offering various logistics-
related services
1 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsFurthermore, dKargo has a reward system where participants can gain additional incentives
for just playing their parts. They can contribute to building a more efficient logistics network by
providing logistics services and uploading data, and in return, they can earn additional incentives.
dKargo is providing a new form of logistics service enabling various players to participate in
the platform which was previously impossible. For example, not only traditional logistics service
providers like courier companies but also motorcycle carriers, users of public transportation,
individuals and SMEs can all participate. Moreover, dKargo enables other competent participants
who are operating freight transportation and storage businesses to collaborate. Through
collaboration, logistics-related sectors such as payment, repairs, and inspection, which are all
important to meet the consumer needs, will add new value to the logistics industry.
To achieve dKargo’s objectives, dKargo will expand partnerships with the incumbents. deleo,
a startup company specializing in international delivery service, will join dKargo as an early flagship
partner. deleo is a rapidly growing company, raising Series C funding with the valuation of KRW
100billion. Currently, Kakao Investment, Lotte Global Logistics, and other major Korean venture
capital firms are deleo’s shareholders. deleo also formed a strategic partnership with the U.S.
Postal Service (USPS). deleo has a strong competitive edge in cross-border delivery – deleo’s
major business network in each country and its infrastructure will be keys to dKargo’s success.
Another flagship partner of dKargo is KakaoPay Express, a logistics service provider from Kakao.
Kakaopay is an easy payment service provider from Kakao which is Korea’s no.1 mobile platform
with more than 80% of Koreans using this platform. Kakao, alongside Lotte Global Logistics, a
major Korean logistics service provider, established a joint venture Easygo, which is responsible
for providing KakaoPay Express. More than 50 million active users are familiar with Kakaotalk’s
interface; Lotte Global Logistics has a wide range of logistics system and delivery location points
such as convenience stores, and deleo is an expert in cross-border delivery. Combining all these
strengths together, KakaoPay Express is providing flexible logistics services.
As an open platform, dKargo encourages all businesses that have relevance to the logistics
industry to participate in the platform. By building a logistics ecosystem that fairly distributes
incentives according to the participant’s contribution, dKargo aims to attract various partners to
the dKargo platform.
Ultimately, dKargo aspires to provide efficient logistics services where everyone, including users,
logistics service providers, and consignees, can gain greater benefits.
2 dKargo | Decentralized and Cooperative Protocol for Next Generation Logistics2. Introduction
Increasing consumer demand for flexible logistics services
18 100
92.1
16 90
86.7
81.61 80
14 76.98
72.6 70
12 68.51
64.7
61.14 60
10 57.81
54.69
50
8 15.52
14.35 40
13.29
6 12.33
11.46
9.96 10.68 30
8.72 9.31
4 8.18
20
2 10
0 0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Market size (USD Trilion) Freight volume
The global logistics market is expected to grow from USD 9.9 trillion in 2018 to USD 15.5
trillion by 2024, registering a compound annual growth rate (CAGR) of 7.5%. Many changes are
taking place in the industry as the market is witnessing substantial growth in an ever-changing
business environment. For example, the industry landscape is shifting from B2B based industrial
structure towards B2C and C2C structure, due to the increasing growth of the e-commerce
market. Cross-border trade is surging, thanks to the globalization of technology. On-demand
solutions have expanded to offer various logistics services to customers and now, customer’s
expectations are higher than ever before. Such changes in the market have translated into a
demand for flexible logistics services: faster delivery reaching customers anytime, anywhere at
a reasonable cost regardless of the logistics companies’ business cycles.
3 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsC2C
Business Advancement of
expansion logistics service
Quality growth
Business
expansion B2C
Quantitative Consumer
expansion in the experience
logistics market enrichment
B2B
Domestic Global
Market
Expansion
Incumbents failed to meet the needs of flexible services
Despite the growing demand for more flexible and efficient logistics services, many logistics
companies are struggling to keep pace with rapidly changing customer demands. Customers are
now looking for local, real-time, and personalized deliveries. However, the market currently relies
on the hub-and-spoke model where individual shipments are hauled from regional warehouses to
a central shipping hub where they are sorted and bundled. Under this model, it is difficult to meet
customer demands. Inflexible logistics services can trigger other challenges in different business
environments. For example, logistics service providers in rural areas have less freight traffic and
are likely to deliver one or two goods to the delivery destination. On the other hand, in urban areas
where delivery destinations are concentrated, excessive traffic leads to inefficient deliveries.
Developed countries struggle to meet diverse customer needs
With the expanding e-commerce market in developed countries, there is a greater demand for
more flexible logistics services that ship all different types of goods. But, if the incumbents want
to provide more flexible logistics services to customers, then the cost increase is inevitable.
In Korea, the logistics industry has achieved substantial growth thanks to the development of
e-commerce and the logistics network, but growth in terms of quality has stalled. According
to the Korea Integrated Logistics Association, the average unit price to deliver a single parcel
in Korea’s courier, express and parcel (CEP) market decreased only by 7% from 2010 to 2016.
Under such market conditions, providing flexible logistics services would only lead to price hike
and efficiency loss.
4 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsThe United States is also witnessing an increase in freight traffic with the rise of e-commerce.
Customer expectations for more flexible logistics services are now high whilst many customers
remain price-sensitive to delivery fees. Industry titans like Amazon are using cutting edge
technology and integrating logistics and distribution together to meet such conflicting needs of
the market. Nevertheless, this has left the incumbents with no choice but to increase the price
so they can provide flexible logistics services.
Emerging markets struggle to maintain efficient logistics infrastructure
In emerging markets, logistics services have not scaled into the market due to a lack of efficient
infrastructure.
For example, India has experienced rapid economic growth. As the economy grew, India’s
shipment volume has also rapidly increased and logistics related industries such as warehouses,
freight forwarders, and container businesses have all grown. However, due to inefficient business
operation and a lack of infrastructure, India’s logistics network has reached its capacity and failed
to support India’s continuing economic growth. For example, the logistics network is divided up
by freight transportation companies, so it is difficult to operate the network efficiently. India’s
limited infrastructure coupled with a lack of ICT creates more challenges to India to raise the
efficiency of its logistics network through collaboration.
Limited infrastructure is also a problem for Southeast Asia. This is one of the major issues for
many Southeast Asian countries because relative to the size of their territories, many countries
lack the infrastructure to connect major cities with remote areas or little villages in islands. Only
10% of the roads are paved in Cambodia and Laos, making it difficult for vehicle-based logistics
services to reach many areas in these countries.
Indonesia consists of more than 17,000 islands so it is difficult to build a logistics network
that connects all the islands. Also, among the 47 ports in 9 South East Asian countries, with
the exception of Singapore, Thailand, and Malaysia, most of the ports have very low levels of
performance and capacity for cargo handling, making it even more difficult to build a logistics
network.
In order to address these challenges in Southeast Asia, an expended logistics network which
includes alternative transportation modes such as bicycle delivery, and a system to efficiently
utilize logistics infrastructure have been suggested as solutions. Nevertheless, at the moment
there is no credible protocol that enables the operation of the expanded logistics network.
Data without trust makes it impossible to provide flexible logistics services through
collaboration
International delivery service providers and local logistics companies are cooperating in cross-
border trade. For example, international courier companies like FedEx and DHL are partnering
with small businesses and national postal companies around the world to provide international
delivery. However, such collaboration is currently inefficient because no credible protocol exists
and as result, exchanging data is very difficult. This is because each company runs its own label
5 dKargo | Decentralized and Cooperative Protocol for Next Generation Logisticssystem and only a fraction of data about each cargo is shared. Due to a lack of transparency in
transactions, complex procedures are required to verify transactions. Such inefficiency in the
system ultimately leads to cost increase.
For domestic logistics, every participant in the logistics network invests heavily in all routes from
first-mile to last-mile delivery to secure economies of scale. However, this makes collaboration
even at the smallest level difficult. Participants have, in fact, made double-investment by
investing inefficiently throughout the industry and in return, failed to achieve economies of scale.
In theory, collaboration should be possible by combining the freight volume from each route
so that participants can achieve economies of scale and enjoy mutual benefits. However, the
reality is quite different. There is a possibility of the data-tampering of the frights’ conditions.
Furthermore, standards of each data are all different and a sense of mutual trust is weak due to
silo logistics structure. All these factors make collaboration often challenging.
Furthermore, logistics services are limited to freight transportation and storage due to lack of
collaboration. This hinders the possibility to create added value to the industry. As customer needs
diversify, customer expectations are growing for a variety of logistics-related services such as
payment, packing, inspection, and repairs. Therefore, to some extent, collaboration with various
service providers is essential to provide a wide range of logistics-related services to customers.
However, under the current industrial structure, it is difficult to meet customer demand without
collaboration taking place.
6 dKargo | Decentralized and Cooperative Protocol for Next Generation Logistics3. dKargo Platform
3.1 dKargo : A Decentralized and Cooperative Protocol for Next Generation
Logistics
In order to solve the problems of the current logistics system, it is essential to connect the
separated participants of the value chain to create a flexible one. In this regard, participants
in the logistics system must trust each other and collaborate for their mutual benefit. However,
the heavily competitive logistics system makes collaboration difficult as data resources aren’t
being shared. Even in international logistics where collaboration is relatively important, efficient
collaboration is not taking place because no credible logistics protocol exists.
dKargo aims to build a decentralized and cooperative protocol for next generation logistics
to address current challenges in the logistics industry. Efficient collaboration can be achieved
with credible logistics data provided through dKargo. The platform will eliminate the risk of data
tampering by using a blockchain-based protocol technology and provide a foundation for its users
to collaborate without having to trust the other party. Also, smart contracts will solve the problem
of unfair distribution of profit, which is a major obstacle to collaboration. This can be done without
complex processes by allowing participants to earn incentives that reflect their contribution. This
will allow dKargo to provide an environment for an efficient logistics network where participants
can collaborate and focus on their strengths.
To build this platform, participants must voluntarily share their data. On the platform, each
participant will receive incentives for providing data about their freights and logistics service.
Incentives will encourage businesses such as freight transportation carriers, warehouse
operators, and logistics-related service suppliers as well as individuals like deliverymen,
warehouse employees, and customers to voluntarily participate in the platform. More incentives
will be provided as the platform grows and participants will be able to receive fair incentives for
their contribution to the platform’s growth.
Voluntary participation will lead to further collaboration with a variety of service providers.
The current scope of logistics service will be widened, and customers will be able to enjoy new
services that meet their needs other than freight delivery. Such services include basic services in
freight transportation such as packaging but also other services that create added value such as
freight inspection and repairs. However, such needs aren’t met most of the time except in specific
sectors such as 3PL (Third-Party Logistics), and fulfillment. On top of that, currently available
services aren’t connected in an effective system but are instead relying on phone calls and
cumbersome paperwork. dKargo aims to seamlessly connect such services within the logistics
system to revolutionize the customer experience. The existing logistics system focuses on simply
delivering freight. What dKargo is trying to provide is the advanced model of the existing logistics
system that creates added value.
7 dKargo | Decentralized and Cooperative Protocol for Next Generation Logistics3.2 dKargo’s Solution
Providing credible data through a public ledger based on blockchain
dKargo will provide a credible public ledger by recording information that is needed for
collaboration such as the freight’s contract information, freight’s condition, the participant’s
previous records, and their available resources on the blockchain. This will lay the foundation of
the logistics platform. For example, the platform participants can easily access the recorded data.
At the same time, the tamper-proof data will provide the transparency needed for collaboration.
This will allow dKargo to provide a safe environment for collaboration and solve the problem of
lack of trust which was a major drawback in the logistics industry.
In order to ensure collaboration among participants, it is essential to clearly acknowledge the
contribution and responsibility of each participant to minimize disputes. Currently, data isn’t being
shared among logistic companies because each company is creating and managing their own
data. If a problem occurs under such circumstances, trusting another company’s data is difficult
since data owners can tamper the data to their advantages. For example, a problem can occur
if temperature control is mismanaged during the transportation of pharmaceutical products in
cold chain. However, under the current structure, it is possible to tamper the data of the previous
storage temperature and avoid any responsibility. Such unreliable data will make it difficult to
clarify where the responsibility lies when a problem occurs during collaboration. Furthermore, the
high costs spent to prevent such disputes often defeats the purpose of collaboration.
Contract data Freight data
$
Data on previous Data on available $
records Blockchain resources
Blockchain technology is characterized by transparency and prevention of data tampering. These
traits are suitable for providing credible data to the platform participants. Through blockchain,
dKargo can provide credible data at low prices to the platform participants and minimize disputes
that may arise due to untrustworthy data.
The credible data recorded on dKargo’s platform will allow participants to clarify their contribution
and responsibility for their services. The logistics service’s goal is to provide safe freight delivery.
When this falls through, identifying who is responsible for compensation becomes a contentious
topic.
This forces companies to make complex contracts to minimize collaboration risk or just refuse
to collaborate all together. However, on dKargo’s platform, all contract and freight information
of every stage will be recorded on the blockchain, so it will be clear who bears responsibility.
Hence, participants will be less likely to face disputes without having to deal with any complex
and cumbersome paperwork.
8 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsParticipants are sharing their available resources and transaction history on the dKargo platform,
which allows them to find their optimal partners. Under the current structure, even if participants
want to collaborate, it’s difficult to find ideal partners. Even if they do find them, it’s difficult to
confirm if they have the necessary resources at the time of collaboration. Limited information
makes collaboration difficult because it increases the costs of finding a partner or creates an entry
barrier. dKargo’s participants can access credible data about their partners’ history on the public
ledger. Also, data on available resources will help participants find their ideal partner at the time
of collaboration. This will allow each participant to not only increase the efficiency of their own
logistics service but also make the entire logistics network more efficient by optimizing the use of
their limited resources.
3.3 dKargo’s Value Proposition
dKargo’s goal is to use blockchain technology to create an efficient, flexible logistics network that
was impossible to create in the current, centralized logistics industry. dKargo plans to maximize
participation by connecting users and providing more incentives to voluntary participants.
dKargo will provide the following to create an efficient, flexible logistics network:
Expanding sectors of logistics industry
Value 3
Interconnected
Logistics
Traditional logistics industry
Value 1 Value 2
Whole-mile
A.I. Route Logistics
Optimization
Expansion of logistics network
Maximizing Efficiency of the Logistics Industry: A.I. Route Optimization
dKargo will provide a new level of logistics services through flexible collaboration among
participants that was impossible to achieve in the existing system. From the customer’s
perspective, freights were often delivered and stored in an inefficient way due to a lack of
9 dKargo | Decentralized and Cooperative Protocol for Next Generation Logisticscollaboration. For example, a freight from one city can be sent out to a distribution center outside
the city, only to be delivered back to the city. Another example would be customers having to
wait for their parcel to be collected at their homes. These problems can be solved if logistics
service is performed with diverse participants in a flexible, purpose-driven manner. dKargo will
design an optimal route through data sharing and collaboration to build a better functioning
logistics network.
Currently, logistics service is carried out by a single company or through a few participants who
are closely connected to one another. This can be problematic because that single company is
solely responsible to carry out all the tasks even in sectors where they don’t have expertise. As
a result, relatively less competent participants will provide poorer services than more qualified
participants existing in the market. This leads to a cost increase and poor customer experiences.
The most efficient participant for each sector of the supply chain will provide services which
will increase the efficiency of the overall logistics network. Customers can find the most optimal
logistics network route based on the recorded data of each participant on the blockchain. This
will allow customers to have their goods delivered to them in the most efficient way. And logistics
service providers can focus on their strengths and make better, more efficient use of their limited
resources. dKargo provides an opportunity for each participant to enhance their strengths,
thereby raising the efficiency of the entire logistics network.
Freight headed to A Freight headed to A
Destination A Destination A
Freight headed to B Freight headed to B
Destination B Destination B
Company A Company A
Freight headed to A Freight headed to A
Destination A Destination A
Freight headed to B Freight headed to B
Destination B Destination B
Company B Company B
The logistics industry is one of the main industries where economies of scale play into factor,
which means that the more freight volume a company has, the lower their operating costs will
be. Until now, logistics companies competed to gain more freight volume by using economies
of scale to their advantage. Realistically speaking, there are limitations to the freight volume a
single company can handle. There are also situations where delivery trucks are starting their
delivery half-empty or where the delivery period is delayed because trucks have to wait to be
fully filled. Such inefficient operation ultimately results in a unit price increase and poor customer
experiences.
10 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsIn this regard, dKargo offers a solution to maximize economies of scale by encouraging
collaboration among participants to gather the freight volume for the same route. Each
participant can find each other’s contractual information on the public ledger available on
dKargo’s platform and trade their delivery volume, if necessary, to maximize the freight volume
for each route. Available resources and logistics data that is generated by real-time tracking on
dKargo’s platform will also be used for machine learning and help participants to fully utilize their
resources. Individual participants can minimize the time required to obtain the freight volume
needed for each route and also create economies of scale that wasn’t possible in the current
system. dKargo can provide a better customer experience by drastically lowering the cost of
logistics services while reducing unnecessary operational time.
Evolution of Logistics Ecosystem: Whole-mile Logistics
INDIVIDUAL INDIVIDUAL
(ON FOOT) (BICYCLES)
BUS
PARCEL CARGO TRUCK CONVENIENCE
STORE
CURRENT EXPANDED EXPANDING THE SCOPE
LOGISTICS SYSTEM LOGISTICS SYSTEM OF LOGISTICS SERVICES
FOOD
DELIVERYMEN
WAREHOUSE MOTORCYCLE
CARRIER
SELF-EMPLOYED
COIN LOCKER
TAXI INDIVIDUAL
(PERSONAL CARS)
11 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsFlexible collaboration can create a new level of logistics services. Currently, logistic service
providers don’t collaborate with each other but they also do not collaborate with other logistics-
related service providers in the same line of business. For example, Korea’s courier companies and
short-distance motorcycle carriers have the same goal of delivering goods. However, these two
service providers don’t collaborate to provide the same service. Each logistics service provider
has their own strengths and weaknesses which can complement each other if they collaborate
together. Ultimately, collaboration among various participants can provide an efficient logistics
service that was impossible to provide in the past.
The new environment of collaboration that dKargo is offering will attract new participants into the
logistics ecosystem. Not only existing participants such as courier companies, motorcycle carriers,
cargo truck carriers, and logistics warehouse operators but also new participants who were
irrelevant to the logistics service such as commuters, food deliverymen, taxi drivers, self-employed
people, and coin locker service providers will be able to work together on the platform to provide
better logistics service to customers. For example, instead of a deliveryman collecting parcels
door-to-door, individuals in that area can collect and move the parcels to a self-employed person’s
warehouse, which acts as a city warehouse or access center. The deliveryman then can collect the
gathered parcels, which will help provide a more efficient logistics service. Moreover, individuals can
place parcels in a coin locker and another individual can deliver them to their destinations via public
transportation such as subways and buses. Completely new types of services can be provided,
such as a courier service companies moving the freight to a local warehouse where individuals can
deliver the parcels via bicycles to the destinations that are difficult to reach by car. The logistics
ecosystem is transforming to embrace diversity and is now moving away from the existing method of
strictly dividing the first mile and last mile delivery. It is becoming a whole-mile logistics which uses
the entire logistics network in a more efficient way. dKargo provides an environment where a variety
of participants collaborate together on each step of the supply chain and create new services. So,
participants can record their data and easily participate in the logistics network and experience new
services on the platform and hence, earn extra revenues.
Boundary-Crossing Innovation in Logistics : Interconnected Logistics
During the freight delivery process, there are some market needs that cannot be met by simple
delivery and storage services. Services directly related to freight delivery such as packaging,
transportation, storage, categorizing, and customs clearance are needed as are other related
services such as payment, verification, inspection, and repairs. For example, when cargo is shipped
for commercial purpose, the shipper must receive payment securely from the buyer. That is why in
regions where finance is underdeveloped like in Southeast Asia, payment is included in the logistics
service. An example of such a service would be cash on delivery. Another example would be a third-
party regularly checking the freight’s condition for freight that needs special packaging or extra
attendance.
B2B services offering comprehensive proxy fulfillment services such as storing, packaging, and
transportation already exist to provide a more convenient customer experience. However, these
services aren’t available for individual customers. Even for some businesses, such services are
performed under a closed private contract and thus have limitations to provide flexible services.
12 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsSmart Contract
((C) AS RECEIVER) ((B) AS SERVICE PROVIDER)
Shipper (A) Consignee C
3RD PARTY B
Packaging, Repairs,
Manufacturing, Inspection, etc.
dKargo will create new logistics services, which were not possible before, by connecting smart
contracts with diverse services necessary for users. In order to do so, dKargo will design a contract
to deliver the freight to the consignee while enabling other necessary offline services without any
extra effort, and also will use smart contracts for performance guarantee and payment. This
will allow dKargo to provide a wider range of logistics services that can also increase the value
of freight transportation. Such new services include packaging, storing, inspection, repairs,
washing, and conditional payment. dKargo’s goal is to connect relevant services to logistics
together to provide a more customized experience.
This expanded scope of logistics can address some of the problems exist in many different
sectors. In order to better understand, some case examples in the P2P second-hand trading
market are useful. For instance, the entire P2P second-hand trading market’s size has almost
reached KRW 18 trillion. However, second-hand goods are often traded inefficiently due to the
market’s structural limitations. The risk for fraud or dispute is constantly present because it is
difficult for the seller and buyer to trust each other and also trust the quality of the goods. For
example, there are cases where the seller ships the goods but fails to receive payment, or when
the buyer sends the money but fails to receive the goods. Even if both sides have no intention of
cheating, disputes can arise because the two parties may disagree on the value of the\goods.
Oftentimes, a middleman is paid a high commission or despite the inconvenience, both parties
meet face to face to strike a deal in order to minimize such risks.
dKargo has come up with a solution to solve the problems riddling the second-hand trading
market. It is to connect a variety of services. Imagine a scenario when a buyer and seller are
trading a second-hand good. In this case, the biggest problem is that the both parties are unsure
whether the counter party will send the promised payment and good to each other or not. If they
want to close the deal, then they have no other choice but to trust each other. And often, some
incidents occur where a buyer makes a payment and receives a brick in a parcel, or a seller
13 dKargo | Decentralized and Cooperative Protocol for Next Generation Logisticssends the good but never receives a payment. dKargo can easily solve this problem – when
making a logistics contract at dKargo, a verification service of the goods by the participants
responsible for first-mile and last-mile delivery can be added. So, when receiving the goods, the
participants of first-mile and last-mile delivery can verify whether the goods are the correctly
ordered goods and record them on the blockchain, which can be further used as an evidence
when dispute occurs. Furthermore, by linking these records for payment with smart contracts,
any issues regarding receiving payments can be resolved too. These processes allow the logistic
network participants to earn extra income and thereby provide additional value to all users and
participants of the network. Moreover, if the parties find difficult to reach a mutual agreement
about the value of a traded good, a third-party expert can make an intervention during the trading
process to appraise the value of the good and hence, this type of issue between the two parties
can be resolved. On top of this, a variety of other necessary services in the second-hand trading
such as repairs, cleaning and storage will be available so that users can enjoy these services
more easily.
The abovementioned example of the second-hand trading market is a mere fraction of the type of
services that can be provided. Connecting logistics to various services can be realized in more diverse
ways. Through the flexible collaboration of participants and smart contracts, almost all types of online
and offline services can be connected to logistics, which will solve many challenges we face.
14 dKargo | Decentralized and Cooperative Protocol for Next Generation Logistics4. dKargo Business Flow
dKargo Ecosystem
Logistics Data Market
Research Institute Financial Institution Company Government Others
Logistics data consumer
Data DKA
Blockchain
Service
Data DKA Payment
Data DKA Information service provider Data DKA Settlement service provider DKA Data
Payment Optimal route/
information service DKA / Fiat
Logistic service participants
Expanded logistics network
+ + + + +
Shipper Freight
Consignee
Freight Courier companies Motocycle carrier Individual Public transtport Air carrier ETC
+ Service
Freight Freight + Service
Related services
+ + + +
Packaging Repairs Inspection Manufacturing Others
DKA Guarantee
Staking pool Insurer
DKA
4.1 Provide Optimal Route
dKargo’s service starts with a shipper making a request for a service they want and then receiving a
recommendation for an optimal route. The shipper will record information such as the freight’s type,
size, weight, destination, delivery deadline, transportation costs, safety precautions for handling, and
need for other logistics-related services onto dKargo’s platform. dKargo will then recommend the
optimal route. During the early stages of dKargo, the recommendations will be made based on the
information on dKargo’s blockchain. However, in the long-run, business operators with expertise in
route optimization will eventually provide solutions. This, in turn, will allow dKargo to provide the most
efficient logistics route to its users.
15 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsInspector A Company A Company A
Company A Inspector B Company B Company A Warehouse A Company B
Inspector
Shipper Company B Inspector C Company C Company B Warehouse B Company C Receiver
Company C Inspector D Company D Company C Warehouse C Company D
Inspector E Company E Company E
The shipper then can select the route that best suits their purpose among the various
recommendations. The shipper will sign a logistics contract with the service providers of the
route of their choice. The contract will be recorded on the blockchain and a smart contract for
payment will be written up. Also, the shipper can draw up a conditional smart contract with
their service providers. For example, if a service provider successfully makes a delivery within a
timeframe required by the shipper as a condition, they will be rewarded with incentives. Users
can make such options to create a logistics service that best fits their purpose.
4.2 Payment
After a logistics service contract is signed, the users must make payments. The payments include
not only the costs accrued during logistics processes but all financial transactions that took place
between the shipper and the consignee. All payments can be processed in a batch. dKargo offers
users a variety of payment for their convenience. Users can select existing payment methods such
as cash and credit cards along with DKA tokens, which is a cryptocurrency issued by dKargo.
Those who are not familiar with cryptocurrency can still enjoy the values and benefits which dKargo
provides. Furthermore, collaboration with existing payment service providers such as Kakaopay will
help to lower the entry barrier and help the platform scale into the market.
Some participants on the dKargo platform may have different preferences for fiat money or DKA
tokens as their payment methods. Also, the time when a contract is made and when the payment
is settled may differ. To resolve any confusion that may occur due to the time differences between
payment and settlement, or methods of payment, a settlement service provider is needed. Any
settlement service provider with proven capability to convert fiat money and DKA tokens can
participate in the platform. Further information about ‘settlement service provider’ will be explained
in section 4.9 Value-Added Service Providers.
16 dKargo | Decentralized and Cooperative Protocol for Next Generation Logistics4.3 Settlement
Blockchain
Smart Contract
Information on Information on Information on Information on
forwarded freight forwarded freight forwarded freight forwarded freight
PAY PAY PAY
The settlement made by logistics service users will be paid to participants through a smart
contract. Each participant can request payment for their contribution and will receive payment
when the freight is confirmed to be intact. Once it is verified that no problems occurred to the
freight when the participant was carrying out their service, the payment will be made automatically
via the smart contract. Each participant decided in advance about the ratio of fiat currency and
cryptocurrency they would like to be paid in, and the payment will be made according to their
wish. If the freight is damaged, the payment will be deferred and temporarily held by dKargo.
Once the consignee uploads data about the freight’s status and confirms it is intact, the deferred
payment will be made. If the freight is damaged, compensation will be made through either a
deposit (4.7 Guarantee and Insurance) or an insurance firm (4.9 Value-added Service Providers).
4.4 Recording Data
DKA
In order to operate the platform, diverse platform participants must record data about freights
and logistics services. dKargo will provide DKA tokens as incentives to encourage participants
to voluntarily provide data in the platform. This will encourage participants to use dKargo to earn
17 dKargo | Decentralized and Cooperative Protocol for Next Generation Logisticsextra incentives that they couldn’t have received in the current logistics system.
Participants can earn incentives by uploading various types of data on dKargo. Shippers
can receive incentives for uploading freight and contractual data and writing a review on the
participant who collected the freight. Logistics service participants can earn incentives by
uploading data about their available resources and how the freight is transported and stored. For
consignees, they can input data about the freight’s final conditions and review the participant
who provided the last-mile delivery.
Participants will be encouraged to input data at the moment they received the freight to raise
data credibility. The reward system is designed to provide less compensation the longer it takes
for the participant to input the data. Also, in the long-term, an IoT sensor will be used to monitor
the freight’s condition in real-time, which will solve the problem of data credibility.
incentives will be provided from the incentive pool, which is eatablished with tokens from
transaction fees and partially from the reserve. The amount of compensation will depend on how
much each participant contributed to the platform. This will be further explained in dKargo’s
Economic Model.
4.5 Logistics Data Transaction Market
Right to use data
Data uploader Data user
DKA
Data Information on data
dKargo
Data Market
The data on dKargo’s platform can create immense value for various industries related to the
logistics industry. The public sector, including the government, research institutes and the
private sector such as logistics and IT companies and financial firms are all data consumers.
dKargo will provide a data transaction market for data uploaders and data consumers that
reflects the market’s needs to maximize the value of data on dKargo’s platform.
18 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsData consumers can use the data transaction market to easily search for data owners with
specific traits and have the right to use data by paying DKA tokens to the data provider.
When uploading data, data uploaders can select to what extent their data will be disclosed
on the platform which will allow them to autonomously exercise their data rights. The average
market price will be set as a default price of data. This will allow data uploaders to use the data
transaction market without difficulty. However, the uploader reserves the right to adjust the price
of the data if they wish to. In this regard, dKargo will provide participants further opportunity to
earn extra revenues by uploading their data.
4.6 Transaction Fee
A portion of the payment and settlement must be paid to the platform as a transaction fee.
The transaction fee will be used to provide compensation to platform operators and users. The
total transaction fee will be set at a lower rate than the fees of existing payment settlement
providers, which will be of more profit to the platform participants. If participants make and
receive payment in DKA tokens, they can use the platform at a lower rate than using fiat money.
This will encourage participants to use DKA tokens, as they will reap more benefit from it than
using fiat money.
4.7 Guarantee and Insurance
The amount of tokens staked + The level of guarantee
from insurance companies
Participants must stake DKA tokens as a guarantee for their service.For collaboration-based
logistics service to be possible, all participants must faithfully perform their tasks. If participants
fail to carry out their tasks, they must take responsibility for any costs that occurred. dKargo
participants must stake a certain amount of tokens as a deposit, which will be used as
compensation when a problem occurs.
The tokens that each participant staked is a guarantee of that participant’s service. To receive
more contracts on dKargo’s platform, participants must stake more tokens that are proportionate
to the number of contracts they signed. The amount of tokens each participant must stake is
19 dKargo | Decentralized and Cooperative Protocol for Next Generation Logisticscalculated based on their ratio of risk, which is based on their transaction history. Token staking
provides participants a reason to faithfully carry out their contract. Participants can increase the
amount of staked tokens per contract, which will help to raise the participant’s credibility. It will
also put them in a more favorable position to earn more contracts on the platform.
If the participant wishes to sign more contracts than the amount that their staked tokens
guarantee, an insurance company can step in to provide a guarantee for the new contracts.
Participants will pay the premium via tokens, and the insurance company will pay a portion of
their earnings to dKargo as a transaction fee.
4.8 Mediation of Disputes
As dKargo provides logistics services based on collaboration, various type of operational disputes
can emerge. dKargo can minimize such disputes by recording the entire logistics process on the
blockchain. However, there will be instances where a third-party must mediate the dispute.
When a conflict occurs, The steering committee mandated to mediate will take actions. The
steering committee members will be selected from diverse groups such as logistics service
providers, related service providers, and service users to ensure a fair mediation as in governance
perspective.
4.9 Value-added Service Provider
In addition to logistics service providers and related service providers, dKargo needs value-
added providers that support the seamless operation of dKargo. Value-added service providers’
businesses are either directly or indirectly connected to the dKargo platform. They provide
value-added services that dKargo alone finds challenging to provide to participants. As of now,
settlement service providers, insurance service providers, and information service providers are
dKargo’s main value-added service providers. In the future, dKargo will be able to attract more
additional service providers as the platform grows.
20 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsSettlement service provider
Consumer
Smart Contract
Settlement service provider
Settlement service providers offer flexibility in dKargo’s platform. They convert DKA tokens with
fiat money and also fill the time gap between when the payment order was placed and when
the final settlement was made. Participants can select settlement service providers to settle the
balance when there are different preferences for the payment methods between the parties. In
this case, dKargo will include the settlement service provider in the smart contract to ensure that
each party will receive payment in the manner of their choice. For example, if a service user wants
to pay by credit card and the service provider wants a portion of their payment to be made in DKA
tokens, the settlement service provider will receive the full payment via credit card. The settlement
service provider will then pay the service provider in the payment method of their choice. Each
settlement service provider will decide what their conversion rates and settlement fees will be,
and participants can select the settlement service providers of their choice. Competition among
settlement service providers will help provide more efficient service to platform participants and
users.
Settlement service providers earn revenues through settlement fees and arbitrage trading of
when a payment order is placed and when the actual payment is made. Logistics service by
nature can be very time-consuming. Which means, that there can be a big time gap between
when the payment order is placed and when the actual payment is made, which creates room
to develop new revenue models based on various financial techniques. This allows settlement
service providers to test many business models and hence, provide an efficient settlement that fit
the needs of each participant.
21 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsdKargo’s settlement service providers must handle both DKA tokens and fiat money. So, it is
likely that existing cryptocurrency market players such as cryptocurrency exchanges and financial
institutions with existing payment structure will be the biggest participants on the platform’s early
stages.
Insurance service providers
Provide services
!
User
Send payment
% Insurance
Pay insurance premium service provider
Insurance service providers vouch for dKargo participants in case they sign more contracts than
the amount of tokens they staked. Also, insurance service providers ensure contract performance
guarantee on behalf of participants. Participants can increase the number of contracts they can
sign at the same time through insurance companies as they will provide contract performance
guaranteed. The insurance service provider will receive tokens as premium.
Insurance service providers will provide compensation if the participant fails to fulfill a contract or if
the freight is damaged. To ensure that insurance service providers can provide compensation, they
too must stake a portion of their tokens. Insurance service providers are no exception to signing
contracts proportionate to the number of tokens they staked. Insurance service providers can adjust
the premiums for each participant according to the participant’s transaction history and maximize
their revenue by doing so.
Insurance service providers play an important role in the platform's growth. As the platform's
freight traffic increases, second movers will have to increase their initial capital investment to join
the platform. However, this is a leading cause of discouraging second movers to join the platform
and will become a major obstacle to the platform's growth. Insurance companies will help second
movers to join the platform at a lower cost and help the platform's growth. dKargo won't be a
platform for a select few early movers but will be available for all participants of the logistics industry
to gain value.
22 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsData service providers
Data service providers create values by utilizing the data on dKargo. They manufacture raw logistics
data to create values. dKargo participants receive relevant data they need from their data service
providers and pay them with DKA tokens.
Data service providers contribute to the platform by recommending the optimal logistics route for
each order and providing information to participants that can help raise their efficiency. Outside
the platform, data service providers organize and analyze the big data on dKargo. The data is then
refined to be a data product and helps the data transaction market to function better.
23 dKargo | Decentralized and Cooperative Protocol for Next Generation Logistics5 dKargo’s Economic Model
5.1 DKA Token
dKargo platform issues DKA tokens for participants’ interaction on the platform. DKA tokens
are cryptocurrency based on blockchain technology. They can be traded through exchanges and
converted into fiat money.
DKA tokens can be used for all transactions made on the platform, including providing
incentives to participants for voluntarily providing data, cost for data use and dispute mediation,
payment for services, and guarantees for contract fulfillment. The value of DKA tokens will rise
in proportion to the platform’s growth. This is because there will be more logistics traffic handled
on dKargo, which will mean an increase in token demand. Also, more tokens will need to be
staked for service payments and as a guarantee for contract fulfilments.
DKA tokens are issued based on Ethereum’s ERC20 tokens. However, they may be changed to
a different protocol depending on the platform’s needs. If there is a shift to a different protocol,
the DKA tokens in circulation will be changed to tokens based on the new protocol.
5.2 DKA Token Incentive Pool
All dKargo platform participants will receive incentives for their participation in DKA tokens.
The incentives will be paid from dKargo’s incentive pool. The incentive pool will be filled by
transaction fees and reserves from the initial token issuing.
Reserves
Compensation
Platform Token pool
% transaction fee
24 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsA portion of the transaction fees from the platform will be reserved in the incentive pool to
stably provide incentives to platform participants. This is to ensure that profits generated in the
platform will be distributed to participants who provide quality service.
Until the dKargo platform settles down, the incentive pool based on the transaction fees of
the platform won’t be able to provide sufficient compensation to participants. As a solution to
this problem, incentives will be paid from the tokens issued in the earlier stage. In the long
term, there will be a sizeable incentive pool from transaction fees as the value of DKA tokens
appreciates and as the platform grows larger.
5.3 DKA Token Incentives Distribution
Each participant will contribute to the platform by uploading relevant data. Participant’s data
contribution is essential to the platform’s growth and those who provide more data make bigger
contribution to the platform’s growth.
The incentives are going to be distributed all differently according to the data’s value provided to
the platform. The value of the data will be determined by considering the influence each data had
on the platform and its relative value compared to the accumulated data. Various factors such as
freight traffic, frequency, cycle, trait, and credibility are taken into consideration when calculating
the data’s value. dKargo is going to adjust periodically how the data’s value are weighted. This
will create participants attraction in the earlier stage when the amount of accumulated data on
dKargo is relatively small.
25 dKargo | Decentralized and Cooperative Protocol for Next Generation Logistics6. dKargo Technology Description – Key elements
6.1 dKargo Platform Structure
dKargo’s platform is consist of three layers: the storage layer, the middleware layer, and the
service layer.
Service layer
Storage Payment Insurance Linkage
Middleware Layer
Indexer Auth Info Retrieve Trade
Data Router
Storage Layer
Blockchain Distributed Data Storage
Contractual Freight Reputation Available Reference for
Blockchain information information information resources distributed
information data storage
26 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsStorage Layer (Core Layer)
The storage layer is the foundation of dKargo, where all the major data about the freight and
participants are stored. The storage layer has two main components, the blockchain and external
data storage. The data will be saved into one of the components based on its trait and importance.
Data that is fundamental to collaboration will be recorded on the blockchain. It is to ensure
data credibility and prevent data tampering and any data loss that may come from central
server failure. Data such as contractual information, the location and status of freight at each
stage, participant’s reputation and available resources will be recorded on the blockchain. The
blockchain that dKargo uses is one based on Ethereum, which is currently the most widely
used and proven protocol. However, in the future, dKargo may switch to new-generation main
protocols such as Kakao Klaytn.
The external data storage stores larger data that is needed for service operation. This will
enhance service operation efficiency while solving the problem of blockchain’s slow speed. For
example, data that has value but is not a necessity such as pictures of freight and warehouse
CCTV clips will be stored on the external data storage. dKargo will use widely used storage
systems such as database and AW3 S3 (Amazon Web Services Simple Storage Service) to
help incumbent participants adjust to the platform. If it is required, dKargo will consider using
distributed storage technology.
Among the data that dKargo needs, some can be made public while others need to be private.
If personal information such as data on the shipper and consignee are revealed, it would be
a violation of privacy. And if detailed data on freight is made public it can become a target of
crime. This calls for dKargo to categorize recorded data into two sectors. Data that can be made
public will be recorded on the smart contract to increase efficiency. While data that must be kept
private will be encrypted and can only be viewed by participants of the contract.
Middleware Layer
The middleware layer is an interface that reads and records the data stored on the storage layer.
dKargo’s diverse services can be accessed on the storage layer through the middleware layer.
Participants can use various tools that the middleware layer provides to easily connect their
services to the dKargo platform.
dKargo platform can only succeed when the participants of the current logistics network can
easily join the platform. dKargo will provide SDK (Software Development Kit) to many service
providers currently in operation, to help them connect their services to dKargo’s platform.
SDK will be designed to be compatible with existing programming techniques. This will help
developers who aren’t familiar with blockchain technology to easily participate in the platform.
The middleware layer will also provide extra data on specific information for logistics services
such as the standard specification of freight information, regulations in each country, and
standards for payment. This is to help participants gain easier access to data they need to provide
their services. It will help existing service players to enter the platform.
27 dKargo | Decentralized and Cooperative Protocol for Next Generation LogisticsYou can also read
